Failed property sale by email a ‘poster child’ case, judge says

Last month you wrote about a ruling by the late Justice Sydney Robins which paved the way for signing real estate agreements by fax. Does that also apply to signing offers by email?

The short answer is: yes. As I see it, the reasoning in the Court of Appeal decision in the 1989 case of Rolling v. Willann also applies to concluding real estate deals by email. In that case, Justice Robins wrote that technological advances which expedite the transmission of documents “should be encouraged and approved.”

The longer answer, however, is more complicated. Using a document scanner to create an electronic version of an agreement requires a considerable amount of care and attention. Doing it wrong can result in disastrous consequences for the parties involved.

“This case,” wrote Deputy Judge J. Sebastian Winny, “would make a good case study for realtors on how not to conduct a real estate transaction. And it is another poster child for the wonders of miscommunication by email.”

In the fall of 2011, Ian and Anita Pilon put in an offer on a Kitchener property owned by Adrian and Florica Rosu. The price on the agreement was $400,000. The Rosus signed it back at $420,000, and initialled all the pages except Page 4, the critical signing page.

The sign back was then scanned and emailed back to the agent for the Pilons missing the signature page. Thinking it was valid, the buyers countered at $410,000 and sent the document back to the sellers, again missing the signature page.

The sellers met with their real estate agent, Ninoslav Orasanin. There was some confusion about whether they intended to accept the $410,000 price, or sign it back at $420,000. In any event, the change in price was never initialled and the document was returned to the buyers — still missing the signature page.

Looking back on the events, the deputy judge later noted, “it did not appear that (Clifford van Dincten, the buyers’ agent) examined the document with any significant care — if indeed he opened that email attachment and looked at it at all.”

In this comedy of errors, all parties thought an agreement had been reached. The buyers thought they were paying $410,000, and the sellers apparently thought the price was $420,000.

The sellers acknowledged receiving a “final” copy of the agreement of purchase and sale from their realtor, but did not open the email attachment believing they were aware of its content and felt no need to review it.

The buyers had the home inspected, and waived the condition on home inspection. They were ready, willing and able to close on the scheduled closing date, but the sellers could not provide vacant possession since their tenant had not moved out. The deal died because of the confusion over the price.

The buyers sued for damages exceeding $17,000 and return of their deposit.

After analyzing the evidence, the deputy judge decided that a complete contract was never concluded since it was missing Florica Rosu’s signature, and communication of the acceptance to the buyers was never completed.

The buyers were denied damages but they were awarded return of their deposit.

Sadly, cases like this are all too frequent. A number of lessons emerge for buyers and sellers:

● Always initial every page of an agreement, and every change to the price and the wording.

● It is imperative to retain a copy of every document version that has been signed. If a copy is not available, take a picture of each page with a cellphone.

● Open, print and review all email attachments.

● Monitor every step taken by the real estate agents to ensure nothing is missed.

● And above all, make sure the real estate agent retained has a minimum level of experience and is focused on properly completing the transaction.

Bob Aaron is a Toronto real estate lawyer. He can be reached by email at bob@aaron.ca[2].

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